Oceanfirst Financial Corp. · NASDAQ:OCFC
Oceanfirst Financial — Q1 2024 Earnings Presentation
28 slides from Oceanfirst Financial's earnings presentation, May 17, 2024
Slide 1: OceanFirst Financial Corp. Investor Presentation May 2024
. . . 1 The 1Q 2024 Investor Presentation should be read in conjunction with the Earnings Release furnished as Exhibit 99.1 to Form 8-K filed with the SEC on April 18, 2024 and the Quarterly Report on Form 10-Q filed with the SEC on May 2, 2024. Exhibit 99.1 OceanFirst Financial Corp. Investor Prese
Slide 2: Legal Disclaimer
. . .Legal Disclaimer FORWARD LOOKING STATEMENTS. In addition to historical information, this news release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are based on certain assumptions and describe future plans, strateg
Slide 3: Overview of OceanFirst
. . .Overview of OceanFirst 3 Tailored Footprint Across Key Markets Corporate Overview & Market Data Ticker OCFC (NASDAQ) HQ Red Bank, NJ Branch Network 39 branches and 6 commercial banking centers Core Markets New Jersey, New York City, Greater Philadelphia Expansion Markets Boston and Baltimore Ba
Slide 4: Our Shareholder Value Proposition
. . .Our Shareholder Value Proposition Strong balance sheet – Strategically planned balance sheet provides opportunity to grow loan portfolio at attractive returns while realizing reduced costs of funding for improved profitability. Continued expense management and discipline – Identified and execut
Slide 5: Proven Historical Net Interest Income and Loan Growth
. . .Proven Historical Net Interest Income and Loan Growth 5 76,829 120,262 169,218 240,502 255,971 312,951 305,338 377,477 369,731 86,224 3.25% 2015 3.46% 2016 3.52% 2017 3.71% 2018 3.62% 2019 3.16% 2020 2.93% 2021 3.37% 2022 3.02% 2023 Q1-24 346,791 2.81% Net Interest Margin YTD Mar-24 Annualized
Slide 6: Successful Commercial Loan Growth and Geographic Diversification
. . .Successful Commercial Loan Growth and Geographic Diversification 6 49% 68% 2015 Q1-24 +19% (Commercial % of Loan Portfolio) Commercial Loans by Geography as of Q1-24 Emphasis on Commercial Increase of $6.0B in commercial loans since 2015 41% 29% 23% 7% New Jersey New York Philadelphia Boston &
Slide 7: Balanced Approach to Deposit Pricing and Growth
. . .Balanced Approach to Deposit Pricing and Growth 7 Deposit Composition ($’millions) 256 646 867 937 1,373 775 1,542 2,445 2,320 311 673 661 877 898 1,491 1,608 1,488 1,399 1,260 153 784 736 714 1,022 1,151 860 1,627 1,954 2,350 2,539 3,647 4,202 3,830 3,912 3,866 337 783 757 1,151 1,377 2,133 2,
Slide 8: Conservative Credit Risk Profile
. . .Conservative Credit Risk Profile 8 0.21% 2016 0.01% 0.36% 0.05% 0.11% 2017 0.03% 0.10% 0.05% 0.13% 2018 0.00% 0.12% 0.04% 0.12% 2019 0.02% 0.30% 0.03% 0.11% 2020 0.00% 0.12% 0.02% 0.07% 2021 0.00% 0.11% 0.02% 0.06% 2022 0.00% 0.19% 0.02% 0.05% 2023 0.01% 0.21% 0.02% 0.07% Q1-24 0.35% 0.52% 0.31
Slide 9: Operational Efficiency
. . . 96 85 118 127 147 185 250 345 347 344 7 7 8 9 9 12 13 13 14 14 0 2 4 6 8 10 12 14 16 18 20 0 50 100 150 200 250 300 350 400 2015 2016 2017 2018 2019 2020 2021 2022 2023 Q1-24 Assets per Branch Assets per FTE Operational Efficiency 9 Deposits per Branch ($’millions) 2 (67) bps2.39% 1.73% 2015 Q
Slide 10: Business Model Strength Driving Significant Capital Return
. . .Business Model Strength Driving Significant Capital Return 10 $0.49 $0.55 $0.94 $1.01 $13.67 2015 $1.04 $1.55 $12.94 2016 $1.09 $2.15 $13.58 2017 $1.39 $2.77 $14.26 2018 $1.97 $3.45 $15.13 2019 $2.25 $4.13 $14.98 2020 $2.86 $4.81 $15.93 2021 $2.98 $17.08 2022 $2.98 $6.35 $18.35 2023 $12.33 $13.
Slide 11: Investor Presentation Quarterly
. . . I N V E S T O R P R E S E N T A T I O N 11 Quarterly Earnings Update
Slide 12: Q1-24 Financial Highlights
. . .Q1-24 Financial Highlights 12 (1) For non-GAAP financial measures, please refer to the ‘Non-GAAP Reconciliations’ in the Appendices for a reconciliation to GAAP financial information. (2) CET1 ratio represents an estimate as of Q1-24. (3) PCD loans are not included in these metrics. Refer to As
Slide 13: Loan Portfolio Trends
. . .Loan Portfolio Trends 13 Moderated Loan Growth in the Portfolio ($’millions) ▪ Loan growth has moderated and will likely persist through mid-year with the expectation of low to mid-single digit annualized growth during the second half of the year. ▪ Loan yields continue to improve. 5,297 5,320
Slide 14: Credit Quality Historically Top Quartile and Well Positioned
. . .Credit Quality Historically Top Quartile and Well Positioned ▪ Underlying collateral is diversified: The underlying collateral for the CRE Investor Owned (“Investor”) portfolio is highly diversified. ▪ Low concentration in the Multi-Family portfolio, which represents 7% of total assets. ▪ Matur
Slide 15: Quarterly Credit Trends (1 of 2)
. . . Strong asset quality trends driven by prudent loan growth and credit decisioning. Quarterly Credit Trends (1 of 2) 15 Non-Performing Loans and Assets ($’000)1 Special Mention and Substandard Loans ($’000) Note: At March 31, 2024, of the Special Mention loans and Substandard loans represented a
Slide 16: Quarterly Credit Trends (2 of 2)
. . .Quarterly Credit Trends (2 of 2) 16 Loan Allowance for Credit Losses (ACL) Plus PCD & General Credit Marks / Total Loans NCOs / (Recoveries) and Provision for Credit Loss Expense ($’000) 0.10% 0.60% Q1-23 0.10% 0.61% Q2-23 0.09% 0.63% Q3-23 0.07% 0.66% Q4-23 Q1-24 0.70% 0.71% 0.72% 0.73% 0.73%
Slide 17: Track Record of Strong Credit Performance
. . . COVID-19 Pandemic Track Record of Strong Credit Performance 17 ▪ From 2006 to 2023, inclusive of the Global Financial Crisis, Hurricane Sandy, and the COVID-19 Pandemic, OCFC’s CRE NCO to average CRE loans totaled 7 bps per year compared to 73 bps for all commercial banks between $10 - $50 bil
Slide 18: Deposit Trends
. . .Deposit Trends 18 (1) Deposit beta is calculated as the increase in rate paid on total deposits per quarter divided by the incremental increase in the fed funds rate since January 1, 2022. ▪ Non-maturity deposits decreased by $73 million (or 1%) from the linked quarter. ▪ High-yield savings dec
Slide 19: Net Interest Income and Net Interest Margin Trends
. . .Net Interest Income and Net Interest Margin Trends 19 (1) Core NIM excludes purchase accounting and prepayment fee income. Refer to the Earnings Release for additional information. Core NIM1 vs NIM NIM Bridge Q4-23 NIM -0.01 Non-core impacts Q1-24 NIM 2.82% 2.81% 3.34% 3.30% Q1-23 3.02% 2.97% Q
Slide 20: Expense Discipline and Focused Investment
. . . Core Efficiency Ratio1 Expense Discipline and Focused Investment 20 Core Non-Interest Expense1 ($’000) 7,852 8,629 8,411 7,999 7,761 5,098 5,083 5,258 2,858 2,732 6,154 6,165 6,086 6,430 5,956 1,749 2,465 2,557 2,723 2,717 6,444 6,366 6,638 6,390 6,329 33,920 34,222 35,534 32,126 32,759 Q1-23
Slide 21: Generating Consistent Returns
. . .Generating Consistent Returns 21 Book Value and Tangible Book Value per Common Share ($)1, 2 Core ROAA1, ROTE1, and ROTCE1 • Tangible book value per common share increased by $1.21 (or 7%) compared to the same quarter last year. • Capital remains strong and above “well capitalized” levels. • Re
Slide 22: Management 2024 Outlook
. . .Management 2024 Outlook 22 Loans Deposits Operating Expenses Net Interest Margin Capital • Continued focus on credit risk management, anchored by our diversified CRE portfolio that has performed well in market downturns. • Loan growth has moderated and will likely persist through mid-year with
Slide 23: Investor Presentation Appendix
. . . I N V E S T O R P R E S E N T A T I O N 23 Appendix
Slide 24: CBD Office Concentration Exposure Is Moderate
. . .CBD Office Concentration Exposure Is Moderate 24 CBD Office Portfolio by Geography 13% 35% 34% 18% NY NJ MA PA CBD Proportion of Total Assets 99% 1% CBD Non-CBD Office Loan Classifications 96% 4% Criticized & Classified Non Criticized & Classified Central business district (CBD) loans have a we
Slide 25: Northeast Outperforms Through Credit Cycles
. . . Hurricane Sandy Global Financial Crisis COVID-19 Pandemic Northeast Outperforms Through Credit Cycles… 25 ▪ Historically, net charge-offs for Northeastern headquartered banks have greatly outperformed major exchange traded U.S. banks headquartered in other regions ▪ Median net charge-offs / av
Slide 26: With a Similar Story in Commercial Real Estate Portfolios
. . . Hurricane Sandy Global Financial Crisis COVID-19 Pandemic …With a Similar Story in Commercial Real Estate Portfolios 26 ▪ Northeastern banks’ CRE portfolio net charge-offs have also historically outperformed major exchange traded banks in other regions ▪ Median CRE net charge-offs / average as
Slide 27: Non-GAAP Reconciliations (1 of 2)
. . .Non-GAAP Reconciliations (1 of 2) (1) The sale of specific positions in two financial institutions impacted both equity investments and debt securities for the three months ended March 31, 2023. On the Consolidated Statements of Income, the losses on sale of equity investments and debt securiti
Slide 28: Non-GAAP Reconciliations (2 of 2)
. . .Non-GAAP Reconciliations (2 of 2) Non-GAAP Reconciliation $'000 March 31, 2024 December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023 Tangible Equity Total stockholders' equity 1,665,837 1,661,945 1,637,604 1,626,283 1,610,371 Less: Goodw ill 506,146 506,146 506,146 506,146 506,146 C